The World Diamond Council (WDC) will stay its course, focused on its primary mission of curbing the trade in conflict diamonds, under new acting president Stephane Fischler, who took the helm on July 1 from Andrey Polyakov, who has resigned.

“We have succeeded to almost totally eradicate conflict diamonds from the global market. But, we have to continually remain vigilant, especially in places such as the Central African Republic (CAR), to stop new supplies of conflict diamonds from entering the market,” Fischler tells MiningWeekly Online in a telephone interview from Antwerp, Belgium.

He says the WDC is in the midst of a three-year review of its Kimberley Process (KP) rules, in an effort to expand the programme.

On July 19, 2000, the World Diamond Congress at Antwerp adopted a resolution to strengthen the diamond industry’s ability to block sales of conflict diamonds. The resolution called for an international certification system on the exportand import of diamonds, legislation in all countries to accept only officially sealed packages of diamonds, for countries to impose criminal charges on anyone trafficking in conflict diamonds, and the institution of a ban on any individual found trading in conflict diamonds on the diamond bourses of the World Federation of Diamond Bourses.

The KP is led by the diamond-producing African countries and this system tracks diamonds from the mine to the market and regulates the policing surrounding the export, manufacture and sale of the products.

While the industry is an observer of the KP, only States can be members and they are tasked with implementing the KP rules.

However, according to Fischler, this process is being complicated by a lack of capacity in certain jurisdictions. To build capacity, the WDC has in recent months been hosting diamond evaluation training, for Africans in affected jurisdictions, in Antwerp.

“The real challenge,” he says, “is placing the trainees back in their target countries.”

AREA OF CONCERN
There is only one situation today that is potentially generating concern and that is the CAR, which accounts for less than 1% of global output, Fischler says.

While some zones in the west of the country have been cleared for exports, most of the country is, however, under a blanket ban to export diamonds, as a direct result of ongoing political instability in CAR. The country is under strict monitoring by a team comprising government, industry and civil society representatives tasked with upholding the strict guidelines put forward a year ago to prevent the trade of conflict diamonds, Fischler says.

“Diamonds from the CAR have been slowly returning to the legitimate diamond supply chain under strict supervision of the KP appointed monitoring team. The monitoring process that has been put in place has not come without specific challenges; there have been instances where issues related to the lack of documentation have arisen and as a result the monitoring team took swift and proper action to block shipments that were not meeting the established monitoring guidelines,” Fischler advises.

He adds that the WDC and the KP monitoring team recognise the challenging environment in which the CAR monitoring authorities operate, but nevertheless continues to press the CAR government to increase its efforts to guarantee the traceability of the diamond supply chain within the country and prevent the proliferation of the illicit diamond trade.

As part of this work, there are regular US security updates verifying that declared green zones, or sub-prefectures in CAR, where the export of diamonds has been allowed to resume, continue to remain safe and follow KP procedures.

“The KP continues to become more efficient in our common ability to monitor the exchange of diamonds in CAR, thanks to the more rigorous and efficient work by the local KP focal point. The WDC encourages continued dialogue to identify additional solutions to further strengthen our efforts, but there remains the need for the established guidelines to be strictly followed and local monitoring capacity enhanced. Diamond exports not conforming to the agreed procedures, will continue to be barred from being exported,” adds Fischler.

IMPROVING FRAMEWORK
The WDC relies on governments, United Nations (UN) observers and nongovernmental organisations and their respective reports to give it insight as to what is transpiring on the ground, and by which to gauge the efficacy of its work.

Regional cooperation remains the most critical challenge for the WDC and the KP. Many African nations have significant problems with corruption, porous borders, capacity constraints and loosely regulated alluvial operations.

For this reason, the WDC also supports the work of the Diamond Development Initiative (DDI), launched in 2005 at a meeting of representatives from the UN, national governments, US and UK international development aid agencies, NGOs and the diamond industry. The DDI works to effect systemic change within the artisanal and small-scale mining sector, which accounts for less than 10% of global output, by convening all interested parties in processes and projects that help turn precious stones and minerals into a source of sustainable community development, complementing the KP.

Fischler will serve as acting president from July 1 until May 1, 2018, when he will start his two-year term as WDC president.

NAIROBI – Kenya is reviewing its mining code, a year after enacting new legislation, as it seeks to attract investment into an industry that’s barely grown over the past five years.

The government is working with the UK Department for International Development-funded Extractives Hub to come up with a revised law that balances investor returns with government-revenue needs and international best practice, Mines Secretary Dan Kazungu said. The review is expected to be submitted to the ministry in the next few weeks, he said.

“We want to be attractive, but we also want to get the most out of our resources, based on the spirit of win-win,” Kazungu said in an interview June 30 in the capital, Nairobi. “The investor must get a good return on their investment, but win for government, and win for the community as well.”

Mining companies are facing similar legislative disruption in other African countries. In South Africa, the main industry lobby group is going to court to challenge new rules that seek to give the black majority a bigger stake in the country’s mineral wealth. Tanzania’s parliament is debating new laws that will allow it to renegotiate contracts, while the Democratic Republic of Congo plans to overhaul its mining code to increase the state’s share of revenue from the industry.

Mining contributed 1.1% to Kenya’s total gross domestic product in 2016, compared with 1% in 2012, according to data published by the Kenya National Bureau of Statistics. The country has lagged behind neighbours like Tanzania, where the industry contributed about 4.8% to GDP in 2016, according to the country’s statistics agency.

MINERAL ROYALTIES
Kenya’s existing code imposes royalty rates ranging from 1% of the gross sales value of industrial minerals such as gypsum and limestone, to 5% for gold, 8% for coal, 10% for titanium ores, niobium and rare-earth elements, and 12% for diamonds.

Kenya last reviewed its mining royalties in 2013, when then-Mines Minister Najib Balala cancelled all mining licences and raised royalties.

The Treasury is working on a new income tax act, as part of its long-running review of tax legislation, that is receiving “considerable” input from the Mines Ministry, Kazungu said. Issues being addressed include cross-border mineral trading, he said.

Corporate income tax rates for mining firms operating in Kenya vary from 30% for companies domiciled in the East African country to 37.5% for non-residents.

“We obviously are starting from the position that we want to be competitive,” Kazungu said. “Investors have options. If you frustrate them here, they will probably go somewhere else.”

Kenya is the world’s third-biggest producer of soda ash, used to make glass, and ranks seventh in output of fluorspar, used in steel, according to the US Geological Survey. It also has deposits of rubies and sapphires.

JOHANNESBURG – Mineral Resources Minister Mosebenzi Zwane has said the controversial 2017 Mining Charter gazetted last week was meant to be a catalyst that provides practical expression to the country’s goal of a more inclusive economy.

“We encourage the young people who are the future of this country to embrace the Mining Charter by exploiting the opportunities to be unleashed by this instrument of change,” Zwane said.

“We will be embarking on provincial roadshows in the next two weeks to raise awareness and to take the Charter to the people.”

Zwane said this when he was tabling the R1.779 billion Budget Vote of the Mineral Resources Department in the National Council of Provinces on Wednesday.

The reviewed Mining Charter has caused a lot of uncertainty for stakeholders and the markets by setting new black ownership targets for the industry.

The Chamber of Mines vehemently rejected it, saying that the department had not held meaningful consultations before the introduction of some of the items, and thus it would approach the courts to interdict its implementation.

The targets include new mining rights, holders having 30% black ownership to be shared among employees, communities and black entrepreneurs. Mining rights holders who have complied with the previous target of 26% have to “top up” to 30% within 12 months.

Those applying for prospecting rights would be required to have a “minimum of 50% plus one black person shareholding”. These shareholders must have voting rights.

The National Union of Mineworkers (NUM), on the other hand, welcomed the reviewed Mining Charter, saying that it appreciated the increase from the initial 26% to the 30% minimum BEE shareholding in the industry.

Zwane said the majority of the people of South Africa who make up 90% of the population remained excluded from the economy. He said the economy remained lopsided, unequal and non-inclusive because of the legislative framework.

Zwane said this was a huge detriment to South Africa’s socio-economic growth efforts, adding that the need for radical economic
transformation was more imperative than ever before because it sought to redress the institutionalised monopoly of the economy.

“Economic reforms are needed to ensure broader and inclusive participation to enable the attainment of a far more inclusive and competitive economy,” Zwane said.

“Our primary legislation, the Mineral and Petroleum Resources Development Act (MPRDA), is designed to facilitate easier access to the minerals beneath the soil by the people of South Africa.

“This piece of legislation is being strengthened in order to ensure that the majority of South Africans benefit from the country’s mineral resources sector.”

Over R900 million of the allocated R1.779 billion will be transferred to the department’s entities, who are responsible for work in research and development, skills development and beneficiation.

Zwane also said the rehabilitation of derelict and ownerless mines was ongoing, with a total of 45 sites rehabilitated in Limpopo and KwaZulu-Natal in the previous financial year.

“Yes, I believe firstly, the minister gave the briefing and consultation, including the cabinet and what the minister is doing has been approved by the Cabinet,” Zuma said in the National Assembly during his quarterly question-and-answer session.

The President brushed aside criticism of the charter by the Chamber of Mines of SA, unions, and his own ruling African National Congress, who are concerned about the impact the charter could have on jobs in the sector.

The revised targets in the mining sector includes mining houses should have 30% black ownership to be shared among employees, communities and black entrepreneurs.

Mining rights holders who have complied with the previous target of 26% have to “top up” to 30% within 12 months.

Those applying for prospecting rights would be required to have a “minimum of 50% plus one black person shareholding”.

In the wake of the charter being gazetted, the Chamber of Mines threatened to take the minister to court to interdict from implementing the targets.

LUSAKA – Copper production in Zambia, Africa’s No.2 producer of the metal, is expected to rise to 850 000 t in 2017 from 770 597 t last year, the nation’s vice president said on Thursday.

“Copper production is poised to continue increasing owing to the expansion projects at existing mines and greenfield projects that are ongoing,” Vice-President Inonge Winasaid at a mining and energy conference.